February saw two notable decisions from Canadian courts on motions for interlocutory injunctions in trademark infringement cases. The Federal Court’s decision in Sleep Country Canada Inc. v. Sears Canada Inc., 2017 FC 148 (granting the motion) and the Quebec Superior Court’s decision in Irving Consumer Products Limited v. Cascades Canada ULC, 2017 QCCS 526 (dismissing the motion) are both interesting examples of how courts will approach this kind of motion.
What’s an interlocutory injunction?
An interlocutory injunction is an order requiring an alleged infringer to immediately stop its allegedly infringing activities before the case gets to trial when all of the evidence is presented in support of and in response to the allegations.
Interlocutory injunctions are often sought in trademark infringement cases because it can take many months (sometimes years) for the case to get to trial. If the trademark at issue is being infringed in the meantime, then its owner may be “irreparably harmed” by the time the case is decided: in other words, no award of damages may be able to compensate the owner for the harm it will have suffered from the infringement that’s occurred since the case started.
A trademark owner must prove three things on a motion for an interlocutory injunction: (i) that its allegations raise a “serious issue” of infringement; (ii) that the harm caused by the infringement if it continues until trial would be “irreparable”; and (iii) that the balance of convenience favours granting an interlocutory injunction e.g. awarding an injunction would not cause any undue inconvenience to the alleged infringer. The trademark owner must also undertake to compensate the alleged infringer in the event that the case is ultimately dismissed.
Sleep Country Canada
In the Sleep Country Canada case, the trademark at issue was the plaintiff’s well-known slogan, WHY BUY A MATTRESS ANYWHERE ELSE? The defendant, Sears, had adopted a similar slogan, THERE IS NO REASON TO BUY A MATTRESS ANYWHERE ELSE. Sears effectively conceded that the plaintiff’s allegations of trademark infringement raised a “serious issue” but argued that the motion should be dismissed because any resulting harm (if infringement was ultimately proven) could be quantified and compensated by damages and would therefore not be “irreparable”.
The type of harm at issue was the potential loss of sales to the plaintiff resulting from customer confusion, depreciation of the goodwill associated with the plaintiff’s trademark and lost distinctiveness of the trademark. The plaintiff argued, and led evidence to show, that it would be impossible to quantify such harm, in part, because isolating the impact of the infringement from other market forces that might affect the plaintiff’s sales would be impossible. In response, Sears relied on the testimony of an accounting expert who described a methodology by which any resulting harm could be quantified.
Justice Kane ultimately granted the plaintiff’s motion on the basis that the harm could not be adequately quantified, finding that while Sear’s expert’s methodology was theoretically capable of quantifying the harm, it would be “difficult to the point of impossibility to quantify Sleep Country’s losses”.
Her decision (like the Federal Court’s decision in Reckitt Benckiser LLC v. Jamieson Laboratories, 2015 FC 215) suggests that the Federal Court may be relaxing the onus of trademark owners to prove irreparable harm. In Sleep Country Canada, the onus even seems to be shifting from the trademark owner to prove irreparable harm to the alleged infringer to prove that any harm can be adequately quantified. Until recently, the Court typically dismissed these motions wherever a theoretical methodology existed for quantifying potential harm, no matter how complex and convoluted it might be to apply that methodology.
The onus to prove irreparable harm in this case may also have been relaxed (or shifted slightly to the defendant) because of the strength of the plaintiff’s infringement allegations: the parties’ slogans were clearly confusing.
Irving Consumer Products
The Quebec Superior Court’s decision in Irving Consumer Products Limited v. Cascades Canada ULC shows that the Court’s analysis of irreparable harm is never completely isolated from its view of the merits of the infringement allegations themselves. Where the allegations of infringement are weak, it will be harder to prove that harm resulting from the infringement would be irreparable.
The focus of this case was less on whether the harm would be irreparable than it was on whether any harm at all would result from the alleged infringement. The infringement allegation was that Cascades’ use of a fluffy white bunny with green eyes on the packaging for its bathroom tissue was confusingly similar with Irving’s trademarked fluffy white blue eyed kittens that appear on its own brand of bathroom tissue.
Based partly on the observation that soft furry animals are commonly used to sell bathroom tissue, the Court concluded that “Irving’s chances of success in its recourse are somewhat doubtful”.
The Court then went on to give very little consideration to irreparable harm, concluding on that issue that “any damage [Irving] might suffer… should be largely quantifiable. If less [Irving] bathroom tissue is sold and more Cascades bathroom tissue is sold a damage calculation should be possible.”
Had the "should be largely quantifiable" standard applied in this case been applied in the Sleep Country Canada case, the result may well have been different.